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The key difference between the law of diminishing returns and decreasing returns to scale is that the. former is in the short run, where at least one factor of production is ï¬xed, whilst the latter is in the long. run, where all factors of production/ inputs can be varied. As seen on the diagram below, long run.
DEFINITION of 'Diseconomies Of Scale'. An economic concept referring to a situation in which economies of scale no longer function for a firm. Rather than experiencing continued decreasing costs per increase in output, firms see an increase in marginal cost when output is increased.or example, if in a product required both gadget A and gadget B, diseconomies of scale might occur if gadget B is produced at a slower rate than gadget A. 2) As output increases, costs of transporting the good to distant markets can increase enough to offset any economies of scale.